The holy grail for banks is to become the best at ‘fintegration’



Within Fintech, there has never been a shortage of new terminologies. 2015 saw Fintech (and it’s relationship to banks) explained and re-explained from different angles. However, there are a few broad categories that encompass Fintech:

Legacy Enterprise Software
Fintech companies have been able to disrupt the financial institutions to a point that they are now providing effective and streamlined B2B software for a variety of processes and business concepts traditionally undertaken by the financial institution themselves.
Emerging Technologies
This is perhaps where the most excitement in Fintech lies because of some of the ongoing developments, advances, and innovations in various fields which include:

a) Alternative Finance – The financial sector has started to now see major disruption involving the whole lending regime. It is no  longer safe for banks to assume that their core lending regimes are safe from disruption.

b) Payments – This is by far the most disrupted financial sector. Within the Payment ecosystem, the whole end-to-end payment ecosystem is under constant attack from Fintech companies looking to streamline archaic bank processes.

c) Personal Wealth Management – Private client firms have long enjoyed a monopoly in this sector. The term “wealth management” is thrown around by financial advisers without an actual definition. Fintech firms have been able to provide processes of meeting the needs and wants of clients. Robo-Advisors will continue to see increased application.

d) Cryptocurrencies and Blockchain Technology – The ledger system behind cryptocurrencies such as Bitcoin is here to stay. Bitcoin as the main pioneer might not survive in its current version 1.0, but the Blockchain technology is here to stay. It presents a tremendous opportunity for application into other sectors and not just cryptocurrencies.

Fintech and regulation in 2015

The excitement surrounding Fintech was slightly hampered when regulation such as the PSD2 in Europe took center stage. Regulation is still the dirty little word that seems to follow Fintech. Naturally there has been a lot of concerted effort in lobbying all the Stakeholders worldwide in order to figure out what the opportunities and financial burden involved.

Key PSD2 Elements
The Third Party Payment (TPP) service provision in the directive’s terminology and the ‘Access to Accounts’ (XS2A) rule which will force banks to facilitate access via API to their customer accounts and provide account information to third party apps if the account holder wishes to do so.

‘Fintegration’ and ‘Co-opetition’ in 2016

In 2015 the word “Fintech” was added to Investopedia. However, it’s not the only catchy phrase that tried to explain concepts within the space. The two that stood out are:

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With Fintech 2.0, collaboration between banks and Fintechs has increased. ‘Fintegration’ is the integration of Fintech. Banks have the compliance expertise, the the track record, and the know-how while Fintech comes up with great new experiences that need to scale. The main challenge of ‘fintegration’ is to preserve the acquired Fintech’s agility and innovation, while integrating it to the controls and assets of the bank.[/speech_bubble] [speech_bubble type=”drop” subtype=”d” icon=”Stephen T.jpg” name=”Stefan Tirtey, CommerzVentures’ co-managing director”]


In trying to explain the relationship between Fintech and banks, Stefan Tirtey explains a classic case of ‘co-opetition’ as a scenario where Fintech startups compete with classical banks but have to be close to them too in some cases. Fintech will benefit from collaboration and competition with banks in the long run.[/speech_bubble]

Even though banks seem to have come to terms with Fintech, they have continued to struggle with how best to integrate technological innovations into their operations in order to stay competitive. Digitization is more than just shifting towards “mobile banking”. With studies and surveys showing a sizable shift towards digital, there is a glaring decrease in importance of branch interactions. Therefore, mastering ‘fintegration’ has now become paramount. Fintech has already claimed the re-imagination of banking. However, if integrated effectively, digital will not mean “disruption” of banks but rather the gateway to re-imagined banking.

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What should we expect going forward?

Alternatives – transparent, technology-focused alternatives to banking services that will rejuvenate banking as we know it. In 2015, banks were reactionary to Fintech and seemed overwhelmed by the pace of innovation. Will this change in 2016? Time will tell. What’s sure to happen is smart banking will be at the forefront of every banking initiative as banks opt for collaboration rather than competition with Fintech. 2016 will surely see banks re-position themselves to better tackle the challenges that Fintech presents.

Gaps in the market – Startups will continue to operate in domains that banks are moving away from for regulatory reasons – such as money laundering. This market gap will be attractive enough for Fintech to continue to exploit.

What other terminologies did you come across in the Fintech space in 2015? Post a few in the comments section below.

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